TESTIMONY
OF
SUMMER SPENCER, DIRECTOR
BEFORE
THE COMMITTEE ON WORKFORCE DEVELOPMENT AND GOVERNMENT OPERATIONS
THE HONORABLE
COUNCILMEMBER CAROL SCHWARTZ, CHAIR
PUBLIC OVERSIGHT HEARING ON
THE COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FINDINGS FOR THE DEPARTMENT OF EMPLOYMENT SERVICES
May 28, 2008
Good afternoon Chairperson Schwartz, members, and staff of the Committee on Workforce Development and Government Operations. I am Summer Spencer, Director of the Department of Employment Services. Joining me today is Ibrahim Koroma, our Agency Fiscal Officer, and Larry Pinkett, the Deputy Director of Workforce Development.
I am here today to testify on behalf of Mayor Adrian Fenty regarding the Comprehensive Annual Financial Report (CAFR) Findings for the Department of Employment Services and the action steps taken by DOES to eliminate the deficiencies outlined in the report.
It is important to state at the outset that each of the five areas in which auditors cited DOES with delinquencies are areas in which we feel we can sufficiently address within this fiscal year. Solutions to the problems outlined by the auditors are found in planned software improvements, increased staffing and/or increased staff training. Each of these three solutions are areas in which I have made important performance goals for DOES. I would like to outline a few of the items in which DOES continues to improve in response to the audit report.
First, in the report, auditors stated that DOES should generate more audits in our Unemployment Insurance division (UI). Prior to my appointment as Director of DOES, the six UI tax staff never received any formal training. Nevertheless, in FY08, the staff increased the number of completed audits by 60% from FY07. This noteworthy increase is due to better management by DOES staff and to increased deliverables required by staff. In addition, management has been directed to provide staff with formal audit training which begins in July. Additionally, we have budgeted for an additional 5 FTEs to increase full-time audit staff to eleven. Hiring of additional staff has already begun. Moreover, to increase the number of audits we can complete in a year, DOES’s OIT office improved our technology capabilities. Tasks that were previously done manually are now automated. We expect to reach the full number of audits by FY09 once a full staff is on board.
Another area of improvement is in our UI systems reconciliation. DOES, like other agencies that have large tax offices, uses two systems to process unemployment claims. However, auditors could not tell if these systems agreed. In response to the auditors’ findings, DOES developed a written policy. This formalization of our former process adds a formal signatory page for managers of both systems. This minor change is expected to satisfy auditors concerns for this issue in the future.
Auditors also found that DOES’ ability to provide 38 of the 40 requested backup documentation for processing employer refunds was sufficient. To assure auditors in the future that our employer refund process is viable, auto-assigned software has been created which will provide both DOES and the OCFO appropriate access to employer tax information. This software significantly improves the way we currently validate employer refunds.
Finally, the area of the audit that was given the most attention, that of inadequate controls over the web enabled benefit system, is also the area in which conscientious UI staff discovered the weakness and immediately reported to auditors in August 2007. We took the discovery of this security risk and its further implications very seriously. The auditors then notified the D.C. Office of the Inspector General (OIG). An investigation of this critical matter is ongoing, which does limit the comments that we can provide on this situation.
Although this previous weakness in our system is regrettable, we have since created advanced countermeasures to prevent this situation from reoccurring. A full eight months before the CAFR Report was issued, DOES immediately disabled our website where the vulnerability existed. Further, we reprogrammed our web-enabled UI system to alert our UI Division of any potential threats associated with the fraud currently under investigation.
To further resolve this critical matter, we formed a “working group” in early May which includes representatives from DOES, the Inspector General’s Office, and the Deputy Mayor for Planning and Economic Development’s Economic Development and Regulation Cluster. This group continues to address all of the deficiencies identified in the CAFR Report, review our current practices, and develop and execute specific action tasks to strengthen the security of our UI system.
The improvements we have implemented offer a strong approach to safeguard against any potential weaknesses in our systems. They will also enable auditors to properly review our UI Division. We believe that maintaining a well-tested and well-established automated system designed to alert users and prevent risks, the immediate disabling of any weaknesses uncovered, along with an informed, conscientious staff trained to recognize potential risks is the best approach to preserve the integrity of all our systems.
Thank you for the opportunity to testify on this important matter. We look forward to continuing to work with the Committee and its members to ensure the integrity of the District’s UI program.
I am happy to address any questions you may have at this time.